andhra rules

8/6/2019 Andhra Rules

1/110

Rules 2005

INDEX Pg.No.

RULE

CHAPTER I 79

PRELIMINARY

1 Short Title 792. Commencement 79

3. Definitions 79

CHAPTER II 80-94

REGISTRATION

4. Procedure for Registration 805. Time to apply for Registration 80

6. Effective date of Registration 847. Belated applications for Registration 87

8. Voluntary Registration 899. Start up business 89

10. Issue of Certificates 90

11. Suo-motu registration and refusal to register 9112. Certificate of VAT registration 91

13. Changes in registration details 9114. Procedure for cancellation of VAT registration 92

15. Procedure for cancellation of TOT registration 94

CHAPTER III 95-120

DETERMINATION OF TAXABLE TURNOVER AND

CALCULATION OF TAX PAYABLE

16. Determination of Taxable turnover 95

17. Treatment of works contracts 9618. Tax deduction at source 102

19. Calculation of VAT Payable 103

20. Input tax credit 10421. Calculation of Turnover Tax payable 120

22. Calculation of VAT payable on sales of goods 120predominantly to non-VAT dealers and consumers

CHAPTER IV 121-125RETURNS, PAYMENTS & ASSESSMENTS

23. Tax Returns 121


2/110

24. Tax Payments 12225. Assessments 123

CHAPTER V 126-129TAX INVOICES, CREDIT AND DEBIT NOTES

26. Invoices 126

27. Tax Invoices 12628. Credit Notes and Debit Notes 127

CHAPTER VI 130-135MAINTENANCE OF BOOKS OF ACCOUNTS

29. Records to be maintained by VAT dealer 130

30. Records to be maintained by TOT dealer 13131. Records to be maintained by a dealer executing works contract

132

32. Records to be maintained by Cold Storage plants 133

33. Records to be maintained by Clearing/Forwarding Agents 13334. Records to be maintained by Agents acting on behalf of principals

134

CHAPTER VII 136-138REFUNDS

35. Procedure for Refunds 136

CHAPTER VIII 139

TRANSFER OF A BUSINESS

36. Conditions for Transfer of a Business 139

CHAPTER IX 140-141

CREDIT FOR TAX PAID ON STOCK ON HAND AT THECOMMENCEMENT OF THE ACT

37. Conditions for the Relief of Sales Tax at the Commencement of

the Act 140

CHAPTER X 142-146

APPEALS AND REVISIONS38 Procedure for Appeals 14239 Application for Stay of collection of disputed tax 143

40 Application for Stay when appeal is filed before the AppellateTribunal 143

41 Communication of Appellate or Revisional orders 143

42 Appellate or Revisional Authority may enhance tax payable by adealer 143


3/110

43 Orders of Appellate or Revising authority shall be given effect to144

44 Appeal to the Sales Tax Appellate Tribunal Procedure 14445 Time limit to file Revision Petition to the High Court 144

46 Revision to the High Court Procedure 145

47 Appeal to the High Court Procedure 14548 Review by High Court Procedure 145

49 Orders of the Appellate Tribunal or High Court shall be giveneffect to 145

50 Powers of Revision under Section 32 may be exercised by higher

authorities 14551 Authorities who may exercise powers of revision under Section 32

146

CHAPTER XI 147-150

SEARCH, SEIZURE, CONFISCATION AND ACQUISITION

52 Search as per the procedure prescribed in Cr.P.C. 1973. 147

53 Seizure and confiscation of goods 147

54 Acquisition of goods 150

CHAPTER XII 151-156

MOVEMENT OF GOODS/GOODS VEHICLES & CHECK-POSTS

55 Movement of Goods in Goods Vehicles 15156 Procedures and Powers of officers at Check-posts 152

57 Procedures and powers of officers at other places 15558 Transit Movement 155

CHAPTER XIII 157-169

MISCELLANEOUS

59 Authority Prescribed 157

60 Correction of errors 162

61 Power to require Production of Documents and obtain information162

62 Information to be treated as confidential 162

63 Nomination of responsible person 16464 Mode of service of orders and notices 16465 Conditions regarding enrolment, suspension and 165

cancellation of enrolment of Sales Tax Practitioner

66 Procedure for filing, disposal etc authority for clarification andAdvance Ruling 167

67 Treatment of Tax incentive cases169


4/110

NOTIFICATIONS BY GOVERNMENT

REVENUE DEPARTMENT

[ CT.II ]

FRAMING OF VALUE ADDED TAX RULES OF THE ANDHRAPRADESH VALUE ADDED TAX ACT, 2005 (ACT No.5 of 2005)

[G.O. Ms.No.394, Revenue (CT.II), 31st March, 2005.]


5/110

CHAPTER - I

In exercise of the powers conferred by Section 78 of the Andhra

Pradesh Value Added Tax Act, 2005, the Governor of Andhra Pradeshhereby makes the following rules: -

RULES

1. These rules may be called the Andhra Pradesh Value Added Tax

Rules, 2005.

2. i) Rules 1,2,(i),3,4,5,6,8,9,10 and 11 will come in to force with

effect on and from the 31st January, 2005 and;

ii) The remaining Rules shall come into force with effect from

1st April, 2005.

3. Definitions.In these rules, unless the context otherwise requires:

(a) authority prescribed means the authority specified in Rule59;

(b) Assistant Commercial Tax Officer means any personappointed by the Deputy Commissioner by name or by virtue

of his office to exercise the powers of an AssistantCommercial Tax Officer;

(c) capital goods for the purpose of cancellation of registrationshall mean, any plant and machinery including computer

systems for the purpose of Rule 14 of these rules;

(d) calendar quarter means a period of three months ending on

the 31st March, 30th June, 30th September and the 31st

December;

(e) exempted transaction shall mean the transfer of goodsoutside the State by any VAT dealer otherwise than by way of

sale;

(f) Form means a form appended to these rules.;

(g) Government Treasury means a treasury or sub-treasury ofthe State Government and includes any branch of any bank

notified by the Government from time to time;

(h) Section means a section of the Andhra Pradesh Value AddedTax Act 2005.

(i) tax fraction means the fraction calculated in accordance with

the formula;


6/110

r .r + 100

where r is the rate of tax applicable to the taxable sale.(j) the Act means the Andhra Pradesh Value Added Tax Act

2005.

CHAPTER - IIREGISTRATION

4. Procedure for Registration

1) Every dealer liable or who opts to be registered under sub-

sections (2) to (6) of Section 17, shall submit an application

for VAT registration in form VAT 100 to the authorityprescribed.

2) Every dealer not registered or not liable to be registered for

VAT but liable to be registered under sub-section (7) ofSection 17, shall submit an application for TOT registration inform TOT 001 to the authority prescribed.

3) Every dealer registered under the Andhra Pradesh General

Sales Tax Act, 1957 whose taxable turnover exceeds rupees

five lakhs for the period from 1st day of January 2004 to 31st

day of December 2004, who is neither required to be

registered for VAT nor opted to be registered for VAT shall bedeemed to be registered under sub-section (8) of Section 17.

4) Every dealer who is allotted a Taxpayer Identification Number

(TIN) under Rule 28 of Andhra Pradesh General Sales Tax

Rules 1957 as on the 31st March, 2005 shall be deemed tobe registered as VAT dealer if he is required to register as a

VAT dealer under the provisions of the Act.

5) Where a dealer has more than one place of business within

the State, he shall make a single application in respect of allsuch places specifying therein, one of such places as place of

business for the purpose of registration and submit it to theauthority prescribed.

6) Every dealer required to be registered under clause(c) ofsub-section (5) of section 17 shall authorize in writing on

Form VAT 129 a person residing in the State who shall beresponsible for all the legal obligations of the dealer under

the Act.

5. Time to apply for Registration


7/110

1) (a)Every dealer who is required to register under sub-section(2) of Section 17, shall apply for registration not later than

fifteen days but not earlier than forty five days prior to theanticipated date of the first taxable sale.

(b)Every dealer who is required to register under sub-section

(3) of Section 17 shall make an application by the 15th of

the month subsequent to the month in which the liability toregister for VAT arose.

(c) i) Every dealer who is required to register under sub-section (7) of Section 17 shall make an application for

registration fifteen days prior to commencement ofbusiness, where his taxable turnover is estimated to

exceed rupees five lakhs in the next twelve consecutivemonths.

ii) In the case of a dealer who is required to register undersub-section (7) of Section 17 when his taxable turnover

for the preceding twelve months exceeded rupees fivelakhs, the dealer shall make an application by the

fifteenth of the month subsequent to the month in whichthe taxable turnover exceeded rupees five lakhs.

2) Every dealer who is required to register under sub-section (5)of Section 17 shall apply for registration fifteen days prior to

the anticipated date of first taxable sale but not earlier thanforty five days prior to the anticipated date of first taxable

sale unless an application is made under sub rule (4).

3) Any dealer effecting sales of goods liable to tax under this Act

may apply to register under clause (a) of sub-section (6) ofSection 17 and such registration shall be subject to the

conditions prescribed in rule 8.4) Any dealer intending to effect sales of goods liable to tax

under the Act may

apply to register under clause (b) of sub-section (6) of Section17 and such registration shall be subject to the conditions

prescribed in Rule 9.

ILLUSTRATION OF TIME TO APPLY FOR REGISTRATION ISGIVEN BELOW:

Sl

.No

Rul

e

Sectio

n inthe

Act

Type of

Registration

Time to apply Example


8/110

1 17(2) 5(1)(a) New dealer Apply not later than- Expected date of

commencing 15 days but not taxable sale isbusiness earlier than 45 20.7.2005

days prior to the Time to apply for

anticipated date VAT registration isof first taxable sale between 5.6.2005

and 5.7.2005

2 17(3) 5(1)(b) Running business Apply by the 15th

Liability to register(A TOT dealer of the month

for VAT arose onor unregistered subsequent to the

31.8.2005.

dealer) month in which the - Time to apply for

obligation / liability VAT registrationto register for is on or before

VAT arose. 15.09.2005.

-Review the taxable

turnover for the

preceding 3 monthsat

the end of eachmonth

3 17(4) 4(4) Dealers No need to apply - Deemedregistration

registered for fresh VAT for VAT for thoseunder APGST registration dealers who are

Act and allotted TINs.

allotted TIN.

4 17(5) 5(2) Dealers liableApply for registration - Expecteddate of

for VAT not later than 15 days

transaction /

registration but not earlier than 45 firsttaxable sale

irrespective days prior to making 20.8.2005

of taxable sales or transactions - Time to

apply isturnover requiring VAT between 5.7.2005

registration and 5.8.2005


9/110

5 17(6)(a) 5(3) Existing Since it is a voluntary-

business registration, dealerseffecting can apply when they

taxable sales require VAT

& having no registration.liability to

register forVAT but

opting to

register for VAT.

6 17(6)(b) 5(4) New business No time limit. Adealer setting up a

intending to factory and

anticipating

effect taxable first taxable saleafter,

sales (start up say, 20 months can

business) and apply any time.

applying forVAT registration.

7 17(7) 5(1) New businessApply for TOT - Expected date of

(c)(i) who has a registration 15 commencement

reason to days prior to of business:believe that commencement

20.8.2005his taxable of business. - Time to apply for

turnover in a TOT registration isperiod of next on or before

twelve months 05.08.2005.

will exceedRs.5,00,000

and has noobligation

for VAT

registration

8 17(7) 5(1) Existing When taxable - Taxable turnoverfor

(c)(ii) business which turnover for the

preceding 12is neither preceding 12 months months

exceeded


10/110

registered exceeded Rs.5,00,000Rs.5,00,000 on

for VAT nor apply by 15th of the 31.7.2005for TOT month subsequent to - Time to

apply for

the month in which TOT registrationis

the taxable turnover 15.8.2005.exceeded Rs.5 lakhs - Review the

taxable

turnover for thepreceding 12

months at the endof each month.

9 17(8) 4(3) Dealers No need to apply - Deemedregistration

registered for fresh TOT for TOTunder APGST registration.

Act 1957 andhad taxable

turnover

exceedingRs.5,00,000

but belowRs.40,00,000

for theperiod from1.1.2004 to

31.12.20046. Effective date of Registration

1) The VAT registration shall take effect,-

(a) from the first day of the month during which the first

taxable sale is declared to be made in the case ofregistration under sub-section (2) of Section 17; or

(b) from the first day of the month subsequent to the monthin which the requirement to apply for registration arose

in the case of registration under sub-section (3) ofSection 17; or

(c) from the date of commencement of the Act in the case

of dealers liable for VAT registration under sub-section(4) of Section 17;


11/110

(d) from the first day of the month in which the dealerbecomes liable for registration under sub-section (5) of

Section 17; or

(e) in the case of a dealer in business opting for registration

as a VAT dealer under clause(a) of sub-section (6) of

Section 17,-

i) where the application is made, on or before the 15th

of the month, the effective date will be the 1st day of

the month following the month in which theapplication was made;

ii)where the application is made, after the 15th of the

month, from the 1st day of the month following themonth subsequent to the month in which the

application was made;

(f) from the 1st day of the month in which the dealerapplied for registration under clause(b) of sub-section

(6) of Section 17;

2) In the case of registration under sub-section (7) of Section17, the general registration for turnover tax shall take

effect,-

(a) from the 1st day of the month during which business

commenced in the case of a dealer starting business

and who does not register for VAT, and who has noliability to register for VAT but whose estimated taxable

turnover is more than rupees five lakhs for the followingtwelve consecutive months;

(b) from the first day of the month subsequent to the month

in which the obligation to apply for general registrationarose in the case of a dealer, whose taxable turnover

exceeded rupees five lakhs in a period of twelve

consecutive months

3) In the case of deemed registration under sub-section (8) of

Section 17, the general registration shall take effect from thedate of commencement of the Act.

ILLUSTRATIONS FOR EFFECTIVE DATE OF REGISTRATION

(EDR) UNDER THIS RULE FOR APPLICATIONS RECEIVED INTIME ARE GIVEN BELOW:


12/110

Sl.Section Type of EDR Example

No.in the Ruleregistration

Act

1 17(2) 6(1)(a) New dealer From the first day- Declared date of

commencing of the month during taxable

sale shown

business which the first taxable is20.7.2005

sale is declared to - applied for VATbe made. registration on

3.7.2005- EDR is 1.7.2005

2 17(3) 6(1)(b) Existing From the first day of

- Liability for

business. the month subsequentregistration arose

(A TOT dealer to the month in whichon 31.8.2005

or unregistered the liability to apply- Applied for VAT

dealer). for registration arose. registration

on 11.9.2005

- EDR is 1.10.2005

3 17(4) 6(1)(c) Dealers From 1.4.2005 -

Dealers who areregistered allotted Taxpayer

under APGST IdentificationAct and having Numbers

liability to as on 31.03.2005

register for are deemed to be

VAT. registered as VATdealers.- EDR is 01.04.2005

4 17(5) 6(1)(d) Dealers liable From the first day of - Expected date of

for VAT the month in which thetransaction / sale


13/110

registration dealer has applied underirrespective for VAT registration. the Act is

onof taxable 20.08.2005

turnover - Applied for VAT

registration on05.08.2005

- EDR is 01.08.2005

5 17(6)(a) 6(1)(e) Voluntary From the first day

- Applied for VATregistration of the month registration on

of a existing following the month 10.08.2005business in which application - EDR is

01.09.05

for registration is

made on or before

the 15th of the month.

From the first day - Applied for VAT

of the month followingregistration on

the month subsequent30.08.2005

to the month in which- EDR is01.10.2005.

application for

registration is made

after 15th of month.

6 17(6)(b) 6(1)(f) New business From the first day of

- Dealer setting up

intending to the month in which business oneffect taxablethe dealer has applied 20.7.2005.

sales (Start up for registration. -Applied for VAT

business) registration on

03.09.2005- EDR is 01.09.2005.

7 17(7) 6(2)(a) New dealer From the first day

- Business commenced

commencing of the month during on20.08.2005.

business and which business - EDR is 01.08.2005


14/110

estimating his commenced.taxable

turnover toexceed

Rs.5,00,000

for the following12 consecutive

months and nothaving a liability

for VAT

registration.

8 17(7) 6(2)(b) Existing business From the first day of

- Taxable turnover of

whose taxable the month

subsequent Rs.5,00,000turnover exceeds to the month in whichexceeded

Rs.5,00,000 in a the obligation to

on 31.7.2005.period of 12 apply for general - Liability to apply for

consecutive registration arose. TOT registrationi.e.

months. on or before

15.8.2005- EDR is 01.09.2005.

9 17(8) 6(3) Deemed From 1.4.2005 - EDR is 01.04.2005

registration

for TOT forexisting

registereddealers under

APGST Act

7. Belated application for Registration

1) In the case of belated application for registration submittedafter the time limit prescribed in Rule 5, registration shall

take effect as below,-

(a) where the application was made in the month it was due

or where it is established by the authority prescribed in

the same month in which it was due, the effective dateof registration will be the first of the next month;


15/110

(b) where the application or detection was made in thesubsequent month following the month it was due, the

effective date of registration will be first of the monththe application or detection was made;

(c) where the application or detection was made in the

months subsequentto those defined in (a) and (b) of this sub-rule, the

effective date ofregistration will be first of the month in which the

application or

detection was made;

ILLUSTRATIONS FOR EFFECTIVE DATE OF REGISTRATION

(EDR) UNDER THIS RULE FOR BELATED APPLICATIONS AREGIVEN BELOW:

Sl.Section Type ofNo.in the Ruleregistration EDR Example

Act

1 17(10) 7(1)(a) Belated (i) Application ori) Date of first taxable

application detection in the sale shown is

for registration month in which the20.07.2005

for new dealers application is due- applied for VAT /

commencing - EDR will be the TOT registration

business and first day of the on 31.07.2005liable for VATsubsequent month. - EDR is

1.08.20057(1)(b) or TOT (ii) Application or

ii) date of taxable sale

registration detection in the is 20.7.2005and dealers following month - applied for VAT /

liable for - EDR will be first TOT registration on

VAT registrationday of the month. 16.08.2005irrespective of - EDR is 1.08.2005

7(1)(c) taxable turnover. (iii) Application oriii) date of first taxable

detection in the sale is 20.7.2005subsequent months- applied for VAT /

- EDR will be first TOT registrationday of the month on 15.10.2005


16/110

of application or - EDR is 1.10.2005detection.

2 17(10) 7(1)(a) Belated (i) Application or

i) liability for VAT /

application for detection in theTOT on 31.8.2005

registration for month in which the- applied for VAT /

VAT or TOT application was due TOT registration

onby existing - EDR will be first day 25.09.2005

dealers of the subsequent - EDR is 1.10.2005exceeding month.

registration

threshold. (ii) Application or ii) liability for VAT /

detection in the TOT on 31.8.2005following month in - applied for VAT /which application was TOT

registration

due - EDR will be first on10.10.2005

day of the month in - EDR is01.10.2005

8. Voluntary Registration

1) A VAT dealer registered under clause (a) of sub-section (6) ofSection 17 shall fulfill the following requirements namely,-

(a) the dealer shall be making taxable sales;

(b) the dealer shall have a prominent place of business

owned or leased in his name;

(c) the dealer shall have a bank account;

(d) the dealer shall not have any tax arrears outstanding

under The Andhra Pradesh General Sales Tax Act, 1957

or The Central Sales Tax Act, 1956 or under the Act.

2) A VAT dealer registered under clause (a) of sub-section (6) of

Section 17, shall,-

(a) maintain the full records and accounts required for VAT;

(b) file accurate and timely VAT returns and pay any taxdue;


17/110

(c) remain registered for 24 months from effective date ofregistration.

3) Where VAT dealer registered under clause (a) of sub-section

(6) of Section 17 fails to file timely tax returns and fails topay any tax due and his taxable turnover remains under the

limits specified in sub-sections (2) and (3) of Section 17, theauthority prescribed shall cancel such registration after giving

the VAT dealer the opportunity of being heard.

9. Start up Business:

1) A dealer intending to set up a business in taxable goods whodoes not anticipate making first taxable sale within the next

three months and applying for VAT registration shall betreated as a start up business.

2) The dealer referred to in sub-rule (1) shall make an

application on Form VAT 104 in addition to Form VAT 100 tothe authority prescribed.

3) The dealer applying for registration as a start-up business

under clause (b) of sub-section (6) of Section 17 may applyto be registered only for a period of twenty four months prior

to making taxable sales.

4) The dealer registered as a start up business under clause (b)

of sub-section (6) of Section 17 may claim a tax credit oneach tax return for a maximum period of twenty four months

prior to making taxable sales. The input tax claimed must be

in respect of tax paid on inputs relating to the prospectivetaxable business activities. The credit shall be eligible for

refund under the provisions of Section 38. The provisions ofsub-section (1)(b) of Section 38 shall apply only from the tax

period in which the first taxable sale was made.

5) The dealer registered as a start up business under clause(b)of sub-section (6) of Section 17 shall abide by all the

requirements and obligations of a VAT dealer including the

proper keeping of books of accounts and regular filing ofreturns.

6) A dealer shall cease to be registered under the provisions ofclause (b) of sub-section (6) of Section 17 and shall become

registered under the provisions of sub-section (1) of Section

17, when that dealer makes a taxable sale in the course ofbusiness


18/110

7) A dealer shall cease to be registered under the provisionsclause (b) of sub-section (6) of Section 17 at the end of a

twenty four months period from the date of registration if notaxable sale has been made. In such a case, the registration

will be cancelled under the provision of Rule 12.

8) The Deputy Commissioner may at his discretion, where thereare reasonable grounds, vary the conditions under sub rules

(3), (4), (6) and (7) and may grant a further time upto

twelve months for making the first taxable sale and tocontinue as start up business.

10. Issue of Certificates

The authority prescribed shall issue,-

(a) a certificate of VAT registration on Form VAT 105; or

(b) in the case of a Startup business, a notice on Form VAT 106

in addition to Form VAT 105;

(c) in the case of TOT dealer, a certificate of TOT registration on

Form TOT 003.

11. Suo-moto registration and refusal to register.

1) The authority prescribed may register a dealer who, in the

opinion of that authority, is liable to apply for registration asVAT dealer or a TOT dealer as the case may be, but has

failed to do so. The dealer shall be provided with anopportunity to state his case before registration is effected. A

registration under this sub-rule shall be issued on Form VAT

111 or on Form TOT 005, as the case may be.

2) Where the authority prescribed is not satisfied with the

information furnished by the applicant and has reasons tobelieve that the applicant does not meet the requirements for

registration as VAT dealer or TOT dealer he shall provide an

opportunity specifying the reasons for refusal before passingany orders for refusal to issue registration. A notification

under this rule shall be issued on Form VAT 103 or on FormTOT 017, as the case may be.

12. Certificate of Registration.

1) The certificate of VAT registration or TOT registration shall be

displayed in a conspicuous place at the place of business

mentioned in such certificate and a copy of such certificateshall be displayed in a conspicuous place at every other place

of business within the State.


19/110

2) No certificate of registration issued shall be transferred.

3) Where the certificate of registration issued is lost, destroyed,

defaced or mutilated a duplicate of the certificate shall be

obtained from the authority prescribed.

13. Changes in Registration Details:

1) A dealer registered under Section 17 shall notify the authorityprescribed in writing on Form VAT 112 or on Form TOT 051

as the case may be, within fourteen days,-

(a) of any change in the name, address, of the place ofbusiness or branches or discontinuation of the business;

(b) of a change in circumstances of the dealer which leads to

cessation of business;

(c) of a change in business activities or in the nature oftaxable sales being made or principal commodities

traded.;

(d) of any changes in the constitution of the firm;

(e) of a change in bank account details;

(f) when a dealer commences or ceases to execute works

contract for State Government or local authorities.

2) Where changes in the status of business occur an application

shall be made for fresh registration.

3) (a) where a dealer intends to change his place of businessfrom the jurisdiction of one authority to the jurisdiction

of another authority in the State, he shall make anapplication on Form VAT 112 or on Form TOT 051 as the

case may be, with full particulars relating to the change

of address and the reasons for such change, to theauthority prescribed.

(b) the authority prescribed receiving an application on Form

VAT 112 or on Form TOT 051 as the case may be for achange of place of business shall, on approval of the

application, remove such registration from the existingregistration records. The registration file and the

application shall be transferred to the authority

prescribed in whose jurisdiction the proposed new placeof business is sought to be established.

(c) The authority prescribed receiving the registration fileshall add the details to the records of that authority, and


20/110

issue a new certificate of VAT registration, with theexisting TIN and in respect of a TOT dealer, a new

General Registration Number shall be issued wherevernecessary;

(d) the change in a place of business and a change in

business activities shall not in itself, result in cancellationand fresh registration of a VAT dealer.

14. Procedure for Cancellation of VAT Registration.

1) Where a VAT dealer ceases to carry on business, that dealer

or his legal representative shall apply to the authorityprescribed for cancellation of registration within fourteen

days of the closure of business.

2) Subject to sub-rule (3), a VAT dealer may apply in writing on

Form VAT 121 to have his VAT registration cancelled if,-

(a) with respect to the most recent period of three

consecutive calendar months, the taxable turnover did

not exceed rupees ten lakhs ; and

(b) the taxable turnover for the previous twelve consecutivecalendar months did not exceed rupees thirty lakhs.

3) In the case of a VAT dealer making taxable sales, who is

registered under clause(a) of sub-section (6) of Section 17,an application under sub-rule (2) shall only be made after the

expiration of twenty four months from the date of

registration.4) Every VAT dealer whose registration is cancelled under this

rule shall pay back input tax credit availed in respect of alltaxable goods on hand on the date of cancellation. In the

case of capital goods on hand on which input tax credit has

been received, the input tax to be paid back shall be basedon the book value of such goods on that date:

Provided that in respect of transfer of a business to anotherVAT dealer, there shall be no requirement to repay the input

tax credit availed on capital goods and other goods.

5) The authority prescribed may cancel the registration of a VATdealer who has applied for cancellation under sub-rule (1) or

sub-rule (2) if it is satisfied that there are valid reasons for

such cancellation of registration. The cancellation shall beintimated on Form VAT 124.

6) The authority prescribed may cancel the registration of a VATdealer who has not applied for cancellation of registration if


21/110

the authority prescribed is satisfied that the dealer is notentitled for registration under Section 17 or found to be not

complying with the provisions of the Act.

7) The authority prescribed shall intimate on Form VAT 123 to aVAT dealer when refusing to cancel the registration of the

dealer under this rule within fourteen days of receipt of FormVAT 121.

8) The authority prescribed shall issue a notice on Form VAT

125 to a VAT dealer before compulsorily cancelling theregistration.

9) The authority prescribed may cancel the registration of a VAT

dealer registered under sub-section (6) of Section 17 wherethe VAT dealer

(a) has no fixed place of abode or business; or

(b) has not kept proper accounting records relating to anybusiness activity carried on by him; or

(c) has not submitted correct and complete tax returns;

10) The cancellation of registration shall take effect from the endof the tax period in which the registration is cancelled unless

the authority prescribed orders the cancellation to take effect

at an earlier date.

11) The cancellation of a registration of any VAT dealer shall not

affect any liabilities under the Act or any requirement to

comply with any provisions of the Act until the date ofcancellation of registration.

12) Wherever any order of cancellation or refusal to cancel ismade, the VAT dealer shall be given an opportunity of being

heard.

15. Procedure for cancellation of TOT registration.

1) Where a TOT dealer ceases to carry on business, that TOTdealer or his legal representative shall apply to the authority

prescribed on Form TOT 014 for cancellation of generalregistration within fourteen days of the closure of business.

2) A TOT dealer may apply for cancellation of his generalregistration at the end of any period of twelve

consecutive months if his taxable turnover for that

period does not exceed rupees three lakhs seventy fivethousands (Rs.3,75,000/-).


22/110

3) The authority prescribed shall issue an order of cancellationof registration on Form TOT 015 to the TOT dealer who has

applied for cancellation, if satisfied that there are validreasons for such cancellation of registration.

4) The authority prescribed shall issue an order on form TOT

016 to a TOT dealer, when refusing to cancel the generalregistration number.

5) The authority prescribed shall issue a notice on Form TOT

013 to a TOT dealer before compulsorily canceling thegeneral registration.

6) Cancellation of general registration shall take effect from the

end of the month in which the general registration iscancelled, unless the authority prescribed orders the

cancellation to take effect from an earlier date.

7) The cancellation of a registration of any TOT dealer shall notaffect any liabilities under the Act or any requirement to

comply with any provisions of the Act until the date ofcancellation of registration.

8) Wherever any order of cancellation or refusal to cancel anapplication is made, the TOT dealer shall be given an opportunity of

being heard.

CHAPTER III

DETERMINATION OF TAXABLE TURNOVER ANDCALCULATION OF TAX PAYABLE

16. Determination of Taxable Turnover.

1) Time of Sale:

(a) a VAT dealer selling taxable goods shall account for the

VAT at the earliest of the date of delivery of the goods

or the issue of tax invoice;

(b) input tax credit shall only be claimed on receipt of the

tax invoice.

(2) The following amounts shall not be included for the purpose

of determining the taxable turnover, namely,-

(a) all amounts allowed as discount provided such discount

is allowed in accordance with the regular practice of the

VAT dealer, or is in accordance with the terms of acontract or agreement entered into in a particular case


23/110

and provided also that accounts show that the purchaserhas paid only the sum originally charged less the

discount;

(b) all amounts charged separately as interest or as financecharges in the case of a hire-purchase transaction or any

system of payment by installments.

(3) An adjustment of sale price and VAT or any other tax can be

made in relation to a taxable sale where,-

(a) the sale is cancelled;

(b) the nature of the sale has been fundamentally varied oraltered; or

(c) the previously agreed consideration for the sale has

been altered by agreement with the recipient, whetherdue to an offer of a discount or for any other reason; or

(d) the goods or part thereof have been returned to theseller within a period of twelve months from the date of

sale and the dealer making the sale has accepted the

return of the goods:

In the case of the events listed in clause (a) to (d)

where a tax invoice or an invoice has not yet been

issued, the sale price shall be adjusted in the tax invoiceor in the invoice. Where a tax invoice or invoice has

been issued, a credit or debit note shall be used to

adjust the tax invoice or invoice in accordance with Rule28.

(e) where any goods sold before 31.03.2005 are returned onor after 01.04.2005 and sales tax relief on closing stocks

was already claimed by the buying VAT dealer, an amountequal to the purchase value of the goods and the sales

tax credit claimed shall be deducted from the value of theinput and the value of input tax in the tax period in which

goods are returned by him provided credit note issued by

the seller is on hand. The selling VAT dealer in such case

may reduce his output value and output tax equal to theoriginal sale value and the sales tax in the return for thetax period during which the goods have been returned.

(f) where ever any credit notes are to be issued for

discounts or sales incentives by any VAT dealer to anotherVAT dealer after issuing tax invoice, the selling VAT


24/110

dealer shall pass a credit note without disturbing the taxcomponent on the price in the original tax invoice, so as to

retain the quantum of input tax credit already claimed bythe buying VAT dealer as well as not to disturb the tax

already paid by the selling VAT dealer.

For example: if 100 TVs are sold @Rs.10,000/- each,

amounting to Rs.10,00,000/-, the original tax charged @

12.5% is Rs.1,25,000/-. If the discount of 10% is offered

subsequently based on fresh purchases,

the selling dealer can pass on the benefit of Rs.1,00,000/- for

the price with out disturbing the tax component of

Rs.1,25,000/-. The buying dealer will not alter the input tax

credit already claimed amounting to Rs.1.25,000/-. The

selling VAT dealer will not claim reduction in output tax

liability consequent to lowered price offered.

(*inserted by G.O MS No 2201 Rev(CT-II) Dept. Dt 29th

December 2005 w.e.f 1-12-2005)

4) Where the output tax properly due in respect of the saleexceeds the output tax actually accounted for by the VAT

dealer making the sale, the amount of the excess shall beregarded as tax charged by the VAT dealer in relation to a

taxable sale made in the tax period in which the adjustmenttook place.

5) Where the output tax actually accounted for exceeds the

output tax properly due in relation to that sale, the VATdealer making the sale shall be eligible for an adjustment of

excess amount of VAT in the tax period in which theadjustment took place:

Provided that no such adjustment shall be allowed where the

sale has been made to a person who is not a VAT dealerunless the amount of the excess tax has been repaid by the

VAT dealer to the recipient, whether in cash or as a credit

against any amount owing by the recipient.

6) The provisions of sub-rule (1) to (5) shall mutatis-mutandis

apply to TOT dealer.


25/110

7) In case of a VAT dealer specified in sub-section (9) of Section4, forty percent (40%) of the total amount of consideration

charged by such dealer shall be allowed as deduction and thebalance of sixty percent (60%) of the total amount of

consideration shall be the taxable turnover for the purpose

of levy of tax by way of composition.

17. Treatment of works contracts:

1. Treatment of VAT dealer executing works contract

(a) In the case of contracts not covered by sub-rules 2, 3

and 4 of this Rule, the VAT dealer shall pay tax on thevalue of the goods at the time the goods are

incorporated in the work at the rates applicable to thegoods.

(b) In such a case the VAT dealer shall be eligible to claim

input tax credit on ninety percent (90%) of the tax paidon the goods purchased other than those specified in

sub-rule (2) of Rule 20 and shall be eligible to issue atax invoice.

c) If such VAT dealer awards any part of the contract to a

sub-contractor, such sub-contractor shall issue a taxinvoice to the contractor for the value of the goods at

the time of incorporation in such sub-contract. The taxcharged in the tax invoice issued by the sub-contractor

shall be accounted by him in his returns .

d) The value of the goods used in execution of work in thecontract, declared by the contractor shall not be less

than the purchase value and shall include seignioragecharges, blasting and breaking charges, crusher charges,

loading, transport and unloading charges, stacking and

distribution charges, expenditure incurred in relation tohot mix plant and transport of hot mix to the site and

distribution charges.

e) Subject to clause (d) the following amounts are allowedas deductions from the total consideration received or

receivable for arriving the value of the goods at the timeof incorporation,-

i) Labour charges for execution of the works;

ii) Charges for planning, designing and architects fees;

iii) Charges for obtaining on hire or otherwise machineryand tools used for the execution of the works

contract;


26/110

iv) Cost of consumables such as water, electricity, fuel,etc., used in the execution of the works contract, the

property in which is not transferred in the course ofexecution of a works contract;

v) Cost of establishment of the contractor to the extent

it is relatable to supply of labour and services;

vi) Other similar expenses relatable to supply of labour

and services;

vii)Profit earned by the contractor to the extent it is

relatable to supply of labour and services;

f) Where tax has been deducted at source, the contractor

VAT dealer shall submit Form VAT 501A aftercertification by the contractee. In case the contractor is

unable to submit Form VAT 501A he shall pay the tax

due.

Where the VAT dealer has not maintained the accounts

to determine the correct value of the goods at the time

of incorporation he shall pay tax at the rate of twelveand a half percent (12.5%) on the total consideration

received or receivable subject to the deductions specifiedin the table below: In such cases the contractor VAT

dealer shall not be eligible to claim input tax credit and

shall not be eligible to issue tax invoices.

Standard Deductions for Works Contracts

Sl. Type of contract Percentage of the

totalNo. value eligible for

deduction

1 (a)Electrical Contracts.

(i) H.T. Transmission lines Twenty percent

(ii) Sub-station equipment Fifteen percent

(iii) Power houseequipment and extensions Fifteen percent

(iv) 11 and 22 KV and

L.T. distribution lines 12+5 Seventeen percent(v)All other electrical contracts Twenty five percent

(b) All structural contracts Thirty five percent

2 Installation of plant and machinery Fifteen percent


27/110

3 Fixing of marble slabs, polished granite stonesand tiles (other than mosaic tiles) Twenty five percent

4 Civil works like construction of buildings,

bridges roads etc Thirty percent

5 Fixing of sanitary fittings for plumbing, drainageand the like Fifteen percent

6 Painting and polishing Twenty percent

7 Laying of pipes Twenty percent

8 Tyre re-treading Forty percent

9 Dyeing and printing of textiles Forty percent

10 Printing of reading material, cards, pamphlets,posters and office stationery Forty percent

11 All other contracts Thirtypercent

2. Treatment of Works Contracts executed for State Government or

local authority:

a) Where a dealer executes any contract exceeding a value

of Rs,5,00,000/- (Rupees five lakhs only) awarded by

either a State Government department or a localauthority he must register himself as a VAT dealer.

b) The VAT dealer opting to pay tax by way of compositionunder clause (b) of sub-section (7) of Section 4 shall

apply for composition in Form VAT 250 and shall be

liable to pay tax at the rate of four percent (4%) on thetotal value of the contract;

c) Such tax shall be collected by the contractee

Government Department or local authority and remittedto the authority prescribed within fifteen days from the

date of each payment made to the contractor;

d) The contractee Government Department or localauthority shall complete Form VAT 501 supplied by the

contractor indicating the TIN of the contractor, theamount of tax collected at source and details of the

related contract. Such Form shall be provided to thecontractor;


28/110


29/110

(* b) The VAT dealer shall pay tax at the rate of fourpercent (4%) of fifty percent (50%) of the total

consideration received or receivable for the contract andthe balance fifty percent (50%) of the total consideration

received or receivable shall be allowed as deduction for

the purpose of computation of taxable turnover;) b) The VAT dealer mentioned in clause (a) above shall pay

tax at the rateof four percent (4%) of the total consideration

received or receivable.

(* Substituted by the G.O.Ms.nO.1614, Revenue (CT.II),31st August, 2005 w.e.f 31-8-2005)

c) In the case where the VAT dealer opts for compositionhe shall, before commencing the execution of the work

notify the prescribed authority on Form VAT 250 of the

details including the value of the contract on which theoption has been exercised, and when the VAT dealer

opts to withdraw from composition, he shall notify theprescribed authority on Form VAT 250A.

d) On receipt of any payment related to the contract, thecontractor VAT dealer shall calculate the tax due at four

percent (4%) *(.) of the amount received and shall

enter such details on Form VAT 200. The tax due shallbe paid with the return Form VAT 200;

*(words of fifty percent (50%) are omitted by theG.O.Ms.nO.1614, Revenue (CT.II), 31st August, 2005 w.e.f 31-8-

2005)

e) Where tax has been deducted at source the contractorVAT dealer shall submit Form VAT 501A after

certification by the contractee. In case the contractor isunable to submit Form VAT 501A he shall pay the tax

due;

f) The contractor VAT dealer shall not be eligible for inputtax credit and shall not be eligible to issue tax invoices;

g) Where the contractor VAT dealer awards any portion ofhis contract to a sub-contractor, such contractor shall

not be eligible for any deduction relating to the value ofthe sub-contract. *()

*(the words The sub-contractor if he is a VAT

dealer, in such a case may either opt for composition


30/110

under clause(c) of sub-section (7) of Section 4, or paytax under clause (a) of sub-section (7) of Section 4;

are omitted by the G.O.Ms.nO.1614, Revenue (CT.II), 31st

August, 2005 w.e.f 31-8-2005)

h) In case of a contractor mentioned in clause (a) above,

where any tax is deducted under sub-section (4) of theSection 22, no refund of such tax deducted shall beallowed to the contractor;

i) Where the contractee fails to remit such tax deducted at

source within fifteen days of the date of payment to thecontractor, the authority concerned shall be liable to pay

penalty and interest for the delayed payment.

4. Treatment of Apartment Builders and Developers undercomposition,-

a) Where a dealer executes a contract for construction andselling of residential apartments, houses, buildings orcommercial complexes and opts to pay tax by way of

composition under clause (d) of sub section (7) ofSection 4, he must register himself as a VAT dealer;

b) The VAT dealer shall notify the prescribed authority on

Form VAT 250, of his intention to avail composition forall works specified in clause (a) above, under taken by

him;

c) When the VAT dealer opts to withdraw from

composition, he shall notify the prescribed authority onForm VAT 250A;

d) The VAT dealer shall have to pay tax by way of

composition at the rate of four percent (4%) on twenty

five percent (25%) of the total consideration received orreceivable or the market value fixed for the purposes of

stamp duty, whichever is higher and the balance seventyfive percent (75%) of the total consideration received or

receivable shall be allowed as deduction for the purpose

of computation of taxable turnover;

e) On receipt of any payment related to the contract, the

contractor VAT dealer shall calculate the tax due at four

percent (4%) of twenty five percent (25%) of theamount received and shall enter such details on Form

VAT 200. The tax due shall be paid with the return FormVAT 200;


31/110

f) The contractor VAT dealer shall not be eligible for inputtax credit and shall not be eligible to issue tax invoices;

g) Where the contractor VAT dealer specified in clause (f)

above, awards any portion of his contract to a sub-contractor, such contractor shall not be eligible for any

deduction relating to the value of the sub-contract. *(.)

*( The words The sub-contractor if he is a VAT dealer, insuch a case may either opt for composition under clause (d) of sub-

section (7) of Section 4, or pay tax under clause (a) of sub-section(7) of Section 4. are omitted by the G.O.Ms.nO.1614, Revenue

(CT.II), 31st August, 2005 w.e.f 31-8-2005)

h) Where any dealer mentioned in clause (a) opted forcomposition and paid any tax under the provisions of

APGST Act 1957, before 30.04.2005, there shall be no

further liability in respect of the built up area for which

tax has already been paid under APGST Act, providedthe sale deed is executed in respect of such built up areabefore 30.09.2005.

* i) The VAT dealer mentioned in clause (a) above shall

pay an amount equivalent to one percent (1%) of thetotal consideration received or receivable or the market

value fixed for the purpose of stamp duty, whichever is

higher. This payment shall be made by way of ademand draft obtained in favour of the Commercial Tax

Officer or Asst. Commissioner concerned and the

instrument is to be presented at the time of registrationof the property to the Sub-Registrar, who is registering

the property, duly furnishing his TIN (Tax payer IndexNumber) and the full postal address of the CTO/Asst.

Commissioner concerned on the reverse of the D.D. TheSub-Registrar, shall then send the same to the

CTO/Asst. Commissioner concerned every week.

*(clause (i) was added by the G.O.Ms.nO.1614, Revenue(CT.II), 31st August, 2005 w.e.f 31-8-2005)

5. a) Where the contractor is a TOT dealer as specified inclause(e) of sub-section (7) of Section 4, he shall pay

tax at the rate of one percent (1%) on the value of thegoods at the time of their incorporation in the execution

of the contract.

b) Where the TOT dealer has not maintained the accountsto determine the correct value of the goods at the time


32/110

of incorporation he shall pay tax at the rate of onepercent (1%) on the total consideration received or

receivable subject to the following deductions;

i) Labour charges for execution of the works;

ii) Charges for planning, designing and architects fees;iii) Charges for obtaining on hire or otherwise machinery

and tools used for the execution of the works

contract;

iv) Cost of consumables such as water, electricity, fuel,

etc., used in the execution of the works contract, theproperty in which is not transferred in the course of

execution of a works contract;

v) Cost of establishment of the contractor to the extent

it is relatable to supply of labour and services;

vi) Other similar expenses relatable to supply of labourand services;

vii)Profit earned by the contractor to the extent it is

relatable to supply of labour and services;

c) Where any tax is collected or deducted at source undersub-section (3) or (4) of Section 22, such tax collected

or deducted shall not be refunded to the contractor TOTdealer;

18 Tax deduction at source

1. a) Where a works contract is awarded to a VAT dealer byany contractee other than Government or local

authority, the tax shall be deducted from the payment

made to the contractor at the rate of * (two percent)four percent of the amount paid or payable to the

contractor at the time of each payment as specified insub-section (4) of Section 22;

*(substituted by the G.O.Ms.nO.1614, Revenue (CT.II), 31st

August, and 2005 w.e.f 31-8-2005)

b) The contractee shall complete Form VAT 501A supplied

by the contractor indicating the TIN, the amount of taxdeducted and details of the related contract. The

Contractor, VAT dealer shall send the Form VAT 501A to

the authority prescribed together with proof of paymentwithin fifteen days from the date of each payment made

to the contractor.


33/110

c) Where the VAT dealer has opted to pay tax by way ofcomposition, he shall declare on the Form VAT 200 the

value of the amount received and the tax due. Theamount of tax deducted by the Contractee should be

declared on Form VAT 501A and any balance of tax

payable shall be paid by the contractor. In the casewhere the amount of TDS exceeds the liability the

prescribed authority shall issue a notification for a creditto be claimed on the Form VAT 200.

d) Where the VAT dealer pays tax on the value of the goods

incorporated in the contract he shall declare on FormVAT 200 the value of the goods and tax due on the

goods incorporated in the contract. The appropriate

adjustment for the tax deducted by the Contractee shallbe carried out as in clause (c) ;

19. Calculation of VAT Payable.

1) Subject to sub-rule 2, the tax payable on a taxable sale is

calculated by applying the rate of VAT specified in the Act tothe sale price of the transaction;

2) Where the sale price is to be determined under sub-section

(2) of Section 11, the VAT payable shall be calculated by theformula (T x R), where T is the consideration received for the

taxable sale and R is the tax fraction. The considerationminus the VAT calculated by the above formula is the sale

price;3) The tax payable by a VAT dealer for a tax period shall be

calculated by the formula, X-Y where X is a total of the VAT

payable in respect of all taxable sales made by the VATdealer during the tax period, and Y is the total input tax

credit the VAT dealer is eligible to claim in the tax period

under the Act.

4) Where any dealer gets himself registered for VAT under sub-

section (3) of Section 17, within the time prescribed, the

liability for VAT shall be from the effective date of

registration,-

*{5) a) Any VAT dealer opting to pay tax by way ofcomposition under sub-section (9) of Section 4, shall

apply for composition on Form VAT 250 to the

prescribed authority.

b) Such dealer shall be liable to pay tax at the rate of

twelve and half percent (12.5%) on sixty percent (60%)


34/110

of the total amount of consideration charged, from thefirst day of the month in which the application for

composition is made. The liability to tax shall continuetill the end of the month in which the application for

withdrawal of composition is received.}

*( Sub rule (5) was omitted by the G.O.Ms.nO.1614, Revenue(CT.II), 31st August, 2005 w.e.f 31-8-2005)

20. Input Tax Credit.

1) After the commencement of the Act, where any dealer gets

registered as a VAT dealer or where the authority prescribed

registers any dealer as a VAT dealer under Rule 11 (1), suchdealer shall be eligible for input tax credit as provided under

sub-section (2)(b) of Section 13. The claim shall be made onForm VAT 118 within 10 days from the date of receipt of VAT

registration. The goods on which the input tax credit is

claimed or allowed shall be available in stock on the effectivedate of VAT registration. The documentary evidence for such

claim shall be on the basis of a tax invoice issued by a VATdealer for the purchases made and the input tax credit

allowed on Form VAT 119 shall be claimed on the first return

to be submitted by such dealers. The prescribed authorityshall issue such Form VAT 119 within 10 days of receipt of

Form VAT 118.

2) The following shall be the items not eligible for input taxcredit as specified in sub-section (4) of Section 13,-

a) all automobiles including commercial vehicles / two

wheelers / three wheelers required to be registeredunder the Motor Vehicles Act 1988 and including tyres

and tubes, spare parts and accessories for the repair and

maintenance thereof; unless the dealer is in the businessof dealing in these goods.

b) fuels used for automobiles or used for captive power

generation or used in power plants;c) air conditioning units other than used in plant and

laboratory, restaurants or eating establishments, unless

the dealer is in the business of dealing in these goods.

d) any goods purchased and used for personal

consumption.


35/110


36/110

the fair price shops are dealing in any other goods notsupplied through Public Distribution System, they will be

liable to register under Andhra Pradesh Value AddedTax Act, 2005 depending on their turn over of such

goods and will have to pay tax accordingly.

*(added by G.O.Ms.No.1452, Revenue (CT.II), 26thJuly, 2005 w.e.f 1-4-2005)

l) rice purchased by Food Corporation of India from VATdealers or

farmers or farmers clubs or associations of farmers inthe State.

( Substituted by the G.O MS No.1675 Dated: 23rd

September, 2005

w.e.f 1-4-2005)

m) rice purchased by Andhra Pradesh State Civil Supplies

CorporationLtd., from the Depots of Food Corporation of India, in

Andhra Pradesh

or from any other VAT dealer in the State.

( added by the G.O MS No.1675 Dated: 23rd September,2005

w.e.f 1-4-2005n) refrigerators, coolers and deep freezers purchased

by Soft Drink

Manufacturers not for use in their manufacturingpremises.

o) any goods purchased and used as inputs in job work

p) PDS Kerosene purchased by wholesale dealers for

the purpose of

supplying to Fair Price Shops.

(Clauses (n),(o) and (p) are added by G.O MS No

2201 dt 29th Dec 2005 w.e.f 1-4-2005)

When any goods mentioned above aresubsequently sold without availing any input tax credit,

no tax shall be levied and recovered from a VAT dealer

having been denied the input tax credit at the time ofpurchase. Any VAT dealer having purchased items

mentioned above shall maintain a separate account orrecord without including such purchases in the purchase

of eligible inputs taxable at each rate.

Whenever a VAT dealer makes a claim for input tax

credit for any tax period, the tax paid on the purchases


37/110

of above goods shall be excluded for arriving the eligibleinput tax credit. This principle applies to all the sub rules

in this rule.

3) Where all the sales of a VAT dealer for that tax period are

taxable, the whole of the input tax may be claimed as a

credit excluding the tax paid on the purchase of any goodsmentioned in sub-rule(2).

*3-a) Where any VAT dealer pays tax at the rate of twelve andhalf percent (12.5%) on the sale consideration of a used or a

second hand vehicle already registered in the State under theMotor Vehicles Act,1988, he shall be eligible for notional input

tax credit at the rate of twelve and half percent (12.5%) onthe purchase price actually paid supported by documentary

evidence. Such notional input tax credit shall not exceed the

output tax payable on the sale of used or second hand vehicle

by the VAT dealer.*( Sub- rule (3-a) was added by the G.O.Ms.nO.1614, Revenue (CT.II),

31st August, 2005 w.e.f 31-8-2005)

4) a) Where any VAT dealer buys and sells the goods in thesame form, the input tax credit can be claimed fully in

respect of all the taxable goods purchased for every taxperiod excluding the tax paid on the purchase of any

goods mentioned in sub rule (2). Such VAT dealer is

required to make a declaration in the Form VAT 200D forevery tax period along with tax return.

b) Where any common inputs like packing material areused commonly for sales of taxable and exempt goods(goods in Schedule I), the VAT dealer shall repay input

tax related to exempt element of common inputs after

making adjustment in the tax return for March by filingForm VAT 200B for the period of twelve months ending

March. In Form VAT 200B, the eligible input tax creditshall be calculated by applying formula

A x B

C

Where

A is the total amount of input tax for common inputs for each tax rate

excluding the tax paid on the purchase of any goods mentioned in sub-

rule (2).

B is the sales turnover of taxable goods including zero-rated sales

C is the total turnover including sales of exempt goods


38/110

c) This sub rule is not applicable if the VAT dealer is makingexempt transactions.

5) a) Where the value of taxable sales is 95% or more of the

total value for that tax period, the VAT dealer may claimcredit for the full amount of input tax paid on purchases

b) Where the value of taxable sales is 5% or less of the

total value, the VAT dealer shall not be eligible to claim

input tax credit for that tax period;

c) Such a VAT dealer covered under clause (a) and (b)above, shall make an adjustment in the month of March

for the 12 month period ending with March on Form VAT200B. In the Form VAT 200B, the eligible input tax credit

shall be calculated by applying formula A x B/C. The

excess input credit claimed shall be paid back or thebalance input credit eligible can be claimed in the tax

return for March.

d) This sub rule is not applicable if the VAT dealer is making

exempt transactions

6) Where any VAT dealer is able to establish that specific inputsare meant for specific output, the input tax credit can be

claimed separately for taxable goods. For the commoninputs, such VAT dealer can claim input tax credit by applying

the formula

A x B

C

for the common inputs used for taxable goods, exempt goods(goods in Schedule I) and exempt transactions:

Provided the VAT dealer furnishes an additional return inForm VAT 200A for each tax period for adjustment of input

tax credit and also makes an adjustment for a period of 12

months ending March every year by filing a return in Form

VAT 200B.7) Where a VAT dealer is making taxable sales and sales of

exempt goods (goods in schedule I) for a tax period andinputs are common for both, the amount which can be

claimed as input tax credit for the purchases of the goods ateach tax rate shall be calculated by the formula

A x B .


39/110

C

Provided the VAT dealer furnishes an additional return in

Form VAT 200A for each tax period for adjustment of input

tax credit and also makes an adjustment for a period of 12months ending March every year by filing a return in Form

VAT 200B.

8) a) Where a VAT dealer is making sales of taxable goods

and also exempt transactions of taxable goods in a taxperiod, for the purchases of goods taxed at 12.5%, the

input tax to the extent of 8.5% portion can be fullyclaimed in the same tax period;

b) In respect of purchases of goods taxable at 1%, 4% and

for the 4% tax portion in respect of goods taxable at12.5%, the VAT dealer shall apply formula

A x B .

C

for each tax period:

Provided the VAT dealer furnishes an additional return inForm VAT 200A for each tax period for adjustment of

input tax credit and also makes an adjustment for aperiod of 12 months ending March every year by filing a

return in Form VAT 200B.

9) a) Where a VAT dealer is making sales of taxable goods,exempt sales (goods in Schedule I) and also exempt

transaction of taxable goods in a tax period, for the

purchases of goods taxed at 12.5%, the input tax to theextent of 8.5% portion can be provisionally fully claimed

in the same tax period;

b) In respect of purchases of goods taxable at 1%, 4% and

for the 4% tax portion in respect of goods taxable at12.5%, the VAT dealer shall apply formula

A x B .

Cfor each tax period:

Provided the VAT dealer furnishes an additional return in

Form VAT 200A for each tax period for adjustment of

input tax credit and also makes an adjustment for aperiod of 12 months ending Mach every year by filing a

return in Form VAT 200B.


40/110

10) a) In the case of a VAT dealer filing Form VAT 200B, theexcess input credit claimed including 8.5% provisionally

claimed for sales of exempt goods shall be paid back orthe balance input credit eligible can be claimed in the tax

return for March;

b) For the purpose of this rule, the words A,B and C in theformula

A x B .

Cshall carry the following meaning subject to clause (c)

below -

A is the total amount of input tax for common inputs for

each tax rate for the tax period; excluding the tax paidon the purchases of any goods mentioned in sub-

rule(2);

B is the taxable turnover as defined under the Act forthe tax period, which shall include zero rated sales of

any goods inter state sales, exports and deemed

exports.

C is the total turnover as defined under the Act.

Both the values of B and C shall not include

(i) purchase price of goods taxable under Section 4(4) ofthe Act;

(ii) transactions falling under Section 5 (2), (import)

Section 6 (2) of the CST Act, 1965

(iii) value of transfer of business as a whole;

c) Where a VAT dealer makes exempt transactions for thecalculation of input tax credit in excess of input tax of

4% for 12.5% rate goods, the value of B shall includethe value of the goods transferred outside the State

otherwise than by way of sale (transaction falling under

Section 6(a) of CST Act 1956).

d) For the purpose of sub-rules from (4) to (9) of this Rule,

the value of A is the amount of input tax relating tocommon inputs for each tax rate, B is the taxableturnover and C is the total turnover. For the purpose of

Form VAT 200A, the value of A, B and C would be forthat tax period whereas for the purpose of Form VAT

200B, the values of A, B and C would be the values for

the period of 12 months ending March including March


41/110

e) Any VAT dealer opting for any method of input tax creditcalculation specified from sub-rule (5) to sub-rule (9)

shall be required to be under only one method for 12month period ending March. The method of

adjustment to be made in the return for March shall be

on the basis of latest option exercised by the dealer uptoMarch.

11) The Deputy Commissioner concerned may impose any

conditions or a particular method for a VAT dealer for theapportionment of input tax credit where the VAT dealer

makes taxable and exempt sales and or exempt transactions.

12) Where a VAT dealer opts to pay tax by way of composition or

where a VAT dealer is exempt under Rule 17(2) (j), suchdealer shall furnish Form VAT 200E along with Form VAT 200

for each tax period. Such VAT dealers shall calculate for eachtax period the eligible input tax credit by excluding the

turnover or value relating to composition/exemption in Form

VAT 200E. In addition the VAT dealer shall furnish anadjustment return in Form VAT 200F for the month of March

for a period of 12 months ending March making anadjustment of input tax credit in the Form VAT 200F.

ILLUSTRATIONS FOR RULE 201. VAT dealers following sub-rule( 3) of Rule 20:

(only taxable sales)

TYR, a VAT dealer is dealing in sales of Readymade garments andFootwear which are taxable at 4% % and 12.5% respectively

under the provisions of the Act. TYR is not dealing in sales of any

exempt goods. TYR also purchases packing material and certainother goods required for business. The procedure for claiming

input tax credit for a month is illustrated below:PURCHASES ( INPUT) SALES ( OUTPUT)

RATE OF TAX TURNOVER VAT PAID TURNOVER VATPAYABLE

4% Goods 1,00,000 4,000 60,000 2,400(Readymade

garments &Packing material)

12.5% Goods 2,00,000 25,000 2,20,000 27,500


42/110

( Footwear &other goods)

TOTAL TOTAL

INPUT TAX 29,000 OUTPUT TAX 29,900VAT payable = Output tax Input tax

= Rs.29,900 Rs.29,000

= Rs.900

NOTE: No adjustments need to be carried since the dealer is dealing

only in taxable goods.

2. VAT dealers following sub-rule( 4) of Rule 20:(Resellers of taxable goods and exempt goods)

TVK, a super market, registered for VAT is dealing in

taxable goods (Soaps, Cosmetics, Foodgrains etc) and exempt goods(Sugar, milk, vegetables etc). TVK buys and sells these goods in the

same form every month and also purchases packing material andother goods required for his business. For a tax period, TVK can claim

input tax credit as under:

PURCHASES ( INPUT) SALES ( OUTPUT)

RATE OF TAXTURNOVERVAT PAID TURNOVERVAT PAYABLE

4% Goods 1,00,000 4,000 1,20,000 4,800

12.5% Goods 1,00,000 12,500 80,000 10,000

Exempt goods 50,000 NIL 40,000 NIL

4% goods like

packing materialused as common

inputs for bothtaxable &

exempt goods 10,000 400 NIL NIL

12.5% goodsused in business

common for both

taxable andexempt goods 20,000 2,500 NIL NIL

TOTAL TOTALINPUT TAX 19,400 OUTPUT TAX 14,800

VAT payable/Credit carried over = Output tax Input tax

= Rs.14,800 Rs.19,400

= (+) Rs.4,600


43/110

Credit carried over to next month.

Since TVK has availed full input tax credit on common inputs in the

monthly returns:

(i) the VAT dealer should make declaration in the Form VAT 200D for

each tax period indicating the details of sales of taxable goodsand exempt goods and also details of common input tax and inputtax paid on taxable goods meant for sale and input tax claimed in

the monthly return. No adjustments need to be made for every

tax period.

(ii) the dealer is required to submit a return in Form 200B for Marchto repay input tax related to exempt element of common inputs

after making adjustment of input tax credit for the period oftwelve months ending March for each tax rate.

At the end of March, the turnovers relating to last 12 months are

as under: (Adjustments to be made in Form VAT 200B)

1. Total taxable turnover for 12 months : Rs.50,00,000 -B

2.Total sales of exempt goods for 12 months :Rs.10,00,000

3.Total turnover for 12 months : Rs.60,00,000 -C(Sl.No.1 + Sl.No.2)

4.Common input tax paid & claimed for

12 months on 4% goods : Rs. 4,800-A for 4%

5.Common input tax paid & claimed for

12 months on 12.5% goods : Rs. 30,000-A for 12.5%

Sl. Description 4% rate of goods 12.5% rate goodsNo.

1. Apply calculation A x B/C A x B/C4,800 x 50,00,000 30,000 x 50,00,000

60,00,000 60,00,000

2. Eligible input tax credit 4,000 25,000

3. Input tax credit claimed

in returns 4,800 30,000

4. Balance payable 800 5,000

5. Adjustment Pay this amount byPay this amount by

including 4% output including 12.5%

output


44/110

box in Form VAT 200 box in Form VAT200

for March for March

3. VAT dealer following sub-rule( 5) of Rule 20:

(Taxable goods & sales of exempt goods lesser values

Manufacturers or Resellers)AMD, a rice miller, registered for VAT is engaged in

converting Paddy into rice and selling the same along with otherbyeproducts. AMD is not having any consignment sales or branch

transfers. For a tax period, AMD can claim input tax credit as under:PURCHASES ( INPUT) SALES ( OUTPUT)

RATE OF TAXTURNOVERVAT PAID TURNOVERVAT PAYABLE

4% Goods 1,00,000 4,000 1,50,000 6,000(Paddy from (Rice, brokenother traders & rice, bran)

gunnies)

12.5% Goods 10,000 1,250 NIL NIL

(Machinery items)

Exempt goods

(Paddy husk) NIL NIL 1,000 NIL

TOTAL TOTAL

INPUT TAX 5,250 OUTPUT TAX 6,000VAT payable = Output tax Input tax= Rs.6,000 Rs.5,250

= Rs.750

Since the value of taxable goods is more than 95% of the total sale

value, AMD can claim full amount of input tax credit. However, if thevalue of taxable sales is less than 5% of the total sale value, the VAT

dealer should not claim input tax credit for that tax period.

Further, AMD is required to make an adjustment of input tax credit for

each tax rate in the month of March for the 12 month period ending

March on Form VAT 200B.At the end of March, the turnovers relating to last 12 months are

illustrated below: (Adjustments to be made on Form VAT 200B)

1. Total taxable turnover for 12 months : Rs.80,00,000 - B

2. Total sales of exempt goods for 12 : Rs. 50,000

3. Total turnover for 12 months : Rs.80,50,000 -C


45/110

4. Input tax paid & claimed for12 months on 4% rate goods : Rs. 48,000 -A for 4%

5. Input tax paid & claimed for

12 months on 12.5% rate goods : Rs. 15,000 -A for

12.5% goods

Sl. Description 4% rate of goods 12.5% rate

goodsNo.

1. Apply calculation A x B/C A x B/C

48,000 x 80,00,000 15,000 x80,00,000

80,50,000 80,50,000

2. Eligible input tax credit 47,700 14,907

3. Input tax credit claimed in returns 48,000 15,000

4. Balance payable 300 93

5. Adjustment Pay this amount by Pay this amountby

including 4% output including 12.5%

box in Form VAT 200output box inForm

for MarchVAT 200 for March4. VAT dealer following sub-rule( 6) of Rule 20:

(Specific inputs to specific outputs)

USL, a VAT dealer is engaged in manufacturing of various products.The dealer is manufacturing two separate products (product x and

product y) wherein the dealer always makes taxable sales of product xand the product y is meant for both taxable sales and stock transfers.

The dealer maintains separate records indicating specific inputs

required for specific outputs. For a tax period, the method andprocedure for arriving eligible input tax credit is illustrated below:


RATE OF TAX TURNOVER VAT PAID TURNOVER

VAT PAYABLE

4% Goods for 2,00,000 8,000 1,50,000 6,000taxable goods (Product x)

4% goods common 4,00,000 16,000 3,00,000 12,000

for taxable sales & (Product x


46/110

exempt transactions and y)

12.5% goods specific 32,000 4,000 NIL NIL

to taxable sales

12.5% goods common40,000 5,000 NIL NIL

for taxable sales andexempt transactions

Exempt transactions NIL NIL 1,50,000 NIL(Product y)

TOTAL TOTAL

INPUT TAX 33,000 OUTPUT TAX 18,000USL is using specific inputs for specific taxable sales and certain

common inputs meant for both taxable sales and exempt transactions.

Hence, USL is eligible to claim full input tax credit for VAT paid onspecific inputs for each tax period and for the VAT paid on common

inputs, the eligible input tax credit should be arrived for each taxperiod by applying calculation A x B/C where ;

A = Common input tax for the tax period for each tax

rate

B = Taxable turnover

C = Total turnover

(Including value of exempt

transactions)

Sl. Description4% rateDescription12.5% rateNo

1 Common input 16,000 Common input

5,000tax paid in the tax paid in the tax

tax period period

2 Apply calculation 16,000 x 4,50,000 8.5%

portion 3,4006,00,000 (tax x 8.5/12.5

3 Eligible input tax 12,000 4% portion 1,600(tax 4.5%/12.5%)

Eligible input tax1,600 x 4,50,000in 4% portion out 6,00,000

of 12.5% rate paid. =

Rs.1,200Eligible input tax 3,400 + 1200

credit for 12.5% = 4600


47/110

rate related tocommon inputs

Eligible input tax credit forSpecific inputs : Rs.8,000 (4%) + Rs.4,000 (12.5%)

: Rs.12,000/-

Total eligible input tax credit forthe tax period : Rs.12,000 + Rs.16,600

: Rs.28,600

VAT payable /Credit carried over: Output tax Input tax: Rs.18,000 Rs.28,600

:(+) 10,600 credit carried over to next periodNOTE: I) USL should submit Form VAT 200 A every month, making

adjustment of input tax credit to arrive and claim eligible

input tax credit for that tax period for each rate.

2) Further, USL should also carry out adjustment of input taxcredit for each tax rate for a period of 12 months ending

March and submit such details in Form VAT 200B.

3) Such adjustment shall be made as below:

a) any excess claimed in the monthly VAT returns shall

be paid back in the return for March by adding it tothe appropriate box in the output column for each tax

rate.

b) any balance credit eligible in the monthly returns shall

be claimed is the return for March by adding it to the

appropriate box in the input column for each tax rate.

5. VAT dealer following sub-rule (7 ) of Rule 20:(Manufacturing & selling taxable goods and exempt goods)

KHT, a dairy plant is registered for VAT and engaged in production

and sales of both taxable goods and exempt goods. The procedure

for claiming input tax credit for a month is shown below:


RATE OF TAX TURNOVER VAT PAID TURNOVER VAT PAYABLE

4% rate goods2,00,000 8,000 1,00,000 4,000common for

taxable andexempted goods

12.5% rate 60,000 7,500 NIL NIL

common forboth taxable


48/110

and exemptgoods

Exempt goods5,00,000 NIL 7,00,000 NIL

TOTAL TOTAL

INPUT TAX 15,500 OUTPUT TAX 4,000VAT payable = Output tax Input tax (eligible)

To arrive eligible input tax credit, the VAT dealer should makecalculation A x B/C in Form VAT 200A for the tax period for each tax

rate.

A = Input tax paid for each tax rate


C = Total turnover (Taxable turnover + turnover ofsales of exempt goods)

Sl. Description 4% rate of goods 12.5% rategoods Total eligible

No.

1. Input tax 8000 7500 NIL

paid in thetax period

2. Apply 8,000 x1,00,000 7,500 x 1,00,000 NIL

calculation 8,00,000 8,00,000

3. Eligible input

tax 1000 938 1938

VAT payable in the tax period: Rs.4,000 Rs.1,938: Rs.2,062

NOTE:1) KHT should submit Form VAT 200A every month, making

adjustment of input tax credit to arrive and claim eligible

input tax credit for that tax period.

2) Further, KHT should also carry out adjustment of input tax

credit for each tax rate for a period of twelve months endingMarch and submit such details in Form VAT 200B


a) any excess claimed in the monthly VAT returns shall be

paid back in the return for March by adding it to theappropriate box in the output column for each tax rate.


49/110

b) any balance credit eligible in the monthly returns shallbe claimed is the return for March by adding it to the

appropriate box in the input column for each tax rate.6. VAT dealer following sub-rule(8) of Rule 20:

(Taxable goods & exempt transactions of taxable goods)

SKM, a VAT dealer is engaged in manufacture and sale of Cement.The dealer also despatches the goods on consignment basis to

other States. There are no sales of exempt goods. For a tax

period, the purchases and sales effected by the dealer areillustrated below indicating method and procedure to claim input

tax credit.PURCHASES ( INPUT)SALES ( OUTPUT)

RATE OF TAX TURNOVER VAT PAID

TURNOVERVAT PAYABLE

4% goods 60,00,000 2,40,000 NIL NIL

12.5% goods 50,00,000 6,25,000 5,00,00,000 62,50,000

Exempt

transactions NIL NIL 50,00,000 NIL

TOTAL TOTAL

INPUT TAX 8,65,000 OUTPUT TAX 62,50,000Since the VAT dealer is using the inputs common for both taxable sales

and exempt transactions, SKM should arrive at eligible input tax creditfor each tax rate for the tax period to claim in the monthly return. For

this purpose, SKM should calculate eligible input tax credit in Form VAT

200A for the tax period by applying A x B/C, where ;

A = Input tax paid for each tax rate.


C = Total turnover(Taxable turnover + value of exempt transactions)

Sl. Description 4% rate Description 12.5% rate

No

1 Input tax paid Input tax paid in6,25,000

in the tax period 2,40,000 the tax period

2 Apply calculation 2,40,000 x 5,00,00,000 8.5%

portion 4,25,000(*)


50/110

5,50,00,000 (tax x8.5/12.5

3 Eligible input tax 2,18,182 4% portion (tax

2,00,000

4.5%/12.5%)2,00,000 x5,00,00,000

Apply calculation 5,50,00,000for 4% portion = Rs.1,81,818

Eligible input tax

in 12.5% rate4,25,000 + 1,81,818= 6,06,818

(*) Input tax to the extent of 8.5% portion can be fully claimed in thesame tax period.

Sl. Description 4% rate Description 12.5% rateNo

1 Input tax paid Input tax paid in6,25,000

in the tax period 2,40,000 the tax period


portion 4,25,000(*)5,50,00,000 (tax x

8.5/12.53 Eligible input tax 2,18,182 4% portion (tax

2,00,0004.5%/12.5%)2,00,000 x

5,00,00,000

Apply calculation 5,50,00,000for 4% portion = Rs.1,81,818

Eligible input taxin 12.5% rate4,25,000 + 1,81,818

= 6,06,818

(*) Input tax to the extent of 8.5% portion can be fully claimed in thesame tax period.

7. VAT dealer following sub-rule( 9) of Rule 20:(Taxable sales, sales of exempt goods and exempt transactions of

taxable goods)IAK, a VAT dealer is engaged in manufacture of Cotton

yarn and cloth. The dealer effects stock transfer of cotton yarn to

other states besides making sales of Cotton yarn and exempt goods


51/110

i.e., Cloth. The method and procedure to arrive at and claim eligibleinput tax for a tax period is illustrated below:


RATE OF TAXTURNOVER VAT PAID TURNOVER VAT PAYABLE

4% Goods 1,00,00,000 4,00,000 1,00,00,000 4,00,000

12.5% Goods 8,00,0001,00,000 NIL NIL

Exempt goods NIL NIL 50,00,000 NIL

Exempt

transactions NIL NIL 50,00,000 NIL(Stock transfers

of cotton yarn)

TOTAL TOTAL

INPUT TAX 5,00,000 OUTPUT TAX 4,00,000IAK is using common inputs for sales of taxable goods, sales of

exempt goods and for the values of exempt transactions. IAK shouldarrive at eligible input tax credit for each tax rate for the tax period in

Form 200A by applying A x B/C calculation, where;

A = Input tax paid for each tax rate


C = Total turnover (Taxable turnover + Sales of exempt

Goods + value of exempt transactions)Sl. Description 4% rate Description 12.5% rate

No

1 Input tax paid in Input tax paid in

1,00,000the tax period 4,00,000 the tax period


portion 68,0002,00,00,000 (tax x 8.5/12.5

3 Eligible input tax 2,00,000 4% portion

32,000(tax 4.5%/12.5%)

Eligible input tax 32,000 x

1,00,00,000

in 4% portion out 2,00,00,000of 12.5% rate = Rs.16,000


52/110

paid arrive byapplying calculation

Eligible input tax 68,000 + 16,000

in 12.5% rate goods = 84,000

Total eligible input tax creditfor the tax period : 2,00,000 + 84,000

: Rs.2,84,000

VAT payable for the tax period :Output tax Input tax

(eligible): 4,00,000 2,84,000

: Rs.1,16,000

NOTE: 1) IAK should submit Form VAT 200A every month, making

adjustment of input tax credit to arrive at and claim eligible

input tax credit for that tax period for each rate.

2) Further, IAK should also carry out adjustment of input tax

credit for each tax rate for a period of 12 months ending

March and submit such details in Form VAT 200B.


a)any excess claimed in the monthly VAT returns shall be

paid back in the return for March by adding it to theappropriate box in the output column for each tax rate.

b)any balance credit eligible in themonthly returns shall be claimed is

the return for March by adding it tothe appropriate box in the inputcolumn for each tax rate.

21. Calculation of Turnover Tax payable (TOT).

a) The TOT payable by a TOT dealer shall be calculated byapplying the rate of TOT to the taxable turnover.

b) In cases where the taxable turnover of a dealer exceeds fivelakh rupees in the preceding twelve months and he registers

for TOT within the prescribed time, the liability for TOT shall

be from the effective date of registration.

22. Calculation of VAT Payable on sales of goods

predominantly to non-VAT